guy: 30 minutes to the european close. johnson. vonnie: i'm vonnie quinn. this is the european close on bloomberg markets. we have some interesting things happening. we have a little but of a rollover taking place in equities -- bit of a rollover taking place in equities. outave seen big news coming from the auto sector in europe where we have seen forward cutting back -- ford cutting back. we have also seen what is happening with the british pound right now. we have a number of interesting crosscurrents taking place in the brexit story. jeremy corbyn has been speaking as well. the leader of the opposition talking about a deferral but increasingly is becoming very

clear that theresa may is going to struggle next week to get her brexit plan over the line with mp's and then we have the question of what comes next. the pound turning a little softer today. vonnie: we are seeing some improvement. we started the day lower. we have seen volatility. the president says he will eventually declare a national emergency that he has the word compromise in his vocabulary and the market takes a little bit of a tumble. the market also digesting bad news from retailers and airlines. down 18.5%. nordstrom down 5%. the airline index is down 3.9%. the airlines saying they are going to have limited pricing growth in the next year or so

and that is going to impact their outlooks. that really had an impact on the market this morning. guy: patrick spencer, vice chairman of equities joining us on set in london. good afternoon. we have had a turbulent start to the year. equities have been rallying. most managers continue to tell me that they are not ready to make big decisions. uncertainty is the word they use time and again. are you in that camp? >> no. i think it's one of opportunity. when there is bad news there is usually some quite difficult pricing in the stock market. nearly. market was off 20% in the fourth quarter. 30% to the stock markets are usually very good forecasting machines and they are usually leading indicators. 9% -- up 9% since

december. are climbing walls of worry in my opinion and there's some very good value out we are taking the opportunity. guy: do you mean value stocks or the fact that multiples have come down really dramatically across the board? >> yes. multiples have come down dramatically across the board and i looked this morning and the average of the s&p for the historic.ars is the s&p traded around 19 times. it's now 17 and a half times. and that's just the s&p. within that there is some cheap evaluation. on an average basis the s&p is not expensive and i can find tremendous value in emerging markets, in china, even in europe.

the house view is moderating growth but growth and no recessions and for that reason i think there's a very good value. you said that you are taking opportunity of all of this. you have to give us more details where you are taking the opportunity. about the faang stocks. we are starting to warm to that .rea in the 30% to klein that's one huge opportunity that we see. been a little bit of weakness in consumer discretionary stocks. care willealth continue obviously to outperform and the new location services group that includes a lot of the internet names for us would be quite interesting. certainly technology things like semiconductors which have been beaten up pretty badly is an

area we are starting to look at closely with a view to upgrading. vonnie: what are your thoughts on any kind of trade deal? >> they had some warnings out from the semi's yesterday. you have to remember that group is down to my earlier point of nearly 30% in the fourth quarter aboutmis aren't just iphones or smart phones. driving about autonomously and industrial applications and the global economy despite that softening of it is still growing. applications should pick those earnings for those semiconductor stocks. on china generally i have heard, i have been on this program for many years and the amount of time that i heard about hard i could countna

on many fingers. i think we are there again. they are taking stimulus to and the domestic situation i don't think is as bad as people are making out. guy: do equity investors have to fear the earnings season coming up? aboutill are worried earnings momentum declining. it was only last year that we increasings surprise because of tax cuts. earnings have been cut by 10% from peak. about not worried declining earnings and they don't usually indicate how the market is going to behave over the next 12 months. from 20 have come down to 15% for this quarter and i think earnings have come down from 10% to 8%. and earning yields of 6% equities are still the place to be in my mind.

guy: do you think we are going to continue with the level of buybacks we have seen? >> that's a great question. certainly the industrial inpanies that we cover are rude health because they are paying down debt at a rapid rate and there's more cash on u.s. balance sheet that i've ever seen before. so they have the capacity and the wherewithal to do it. our are a bit worried about man in washington and the filter and what comes with the trade talks. when that's behind us i think you will see a resumption of buybacks. vonnie: what about the you tx news today?- utx other political events are being companiesxcuses for

to not do things or to agitate some other way. any concern that that will impact industrials? >> i think generally on the government situation it's important to remember that no in the u.s.hutdown has ever caused a recession or a market crash. that's really the first important thing. important thing about this government shutdown is that 75% actually of the funding has been approved through to september of this year. you only talking about 25% of nonessential government workers which is horrible for them because they are not getting paid. like museume workers, park attendance. this is noncritical. so i think that's more headline risk than actually bottom line risk and once again i would use opportunity even

though some people are citing it as a reason for pause. i don't think it's a reason to be concerned. we are obviously going to hear from the fed chair later on today. the message has been to the markets keep calm. does it work? yes it did work. he lit a fire under the market last friday when he used the word patient and i think all his fed governors supported him on that even the low inflationary expectations. so if you look at the futures expectations people are looking for the possibility of a rate cut this year. not rate increases. just before he made that statement they were looking for rate increases in january and march about 50% chance of a 25% basis point those have gone to virtually zero now. he certainly lit a fire under the market.

may is about to have a press conference with shinzo abe. this is a chart of the discounts that u.k. stocks have versus the continental stocks. is the u.k. investable? can you take advantage of that discount applies at the moment? >> i'm sorry to be so optimistic. u.k. u.k.nk of the represents 20% of the eu's gdp. we are of vital trading partner to them. they are also fighting trading -- a vital trading partner to us. i suspect the deal will get done because there's too much at stake for no deal to get done. u.k. stocks are trading at 11 times. the yield nearly 4.5%.

it's been 30 years since we have seen the yields on equities been putting ae lot of money into the u.k. market. spencer joining us. vonnie: peers courtney donohoe. >> president trump is off to the border. these flying to mcallen, texas where he will meet with border patrol agent and take part in a roundtable discussion. the president said he has the absolute right to declare a national emergency to build his wall. will probably do that if you can't reach a deal with congress. the trump administration is pushing china to deliver on its promises after three days of trade talks. beijing called the talks

in-depth. a broadlaunching restructuring and an attempt to make the business profitable again. the automaker won't rule out shutting down factories. ford has struggled with an aging model lineup and a shrinking market in the u.k. which is its biggest european market. the uk's biggest automakers also cutting job. about 10% of its workforce. and theresa may is openly considering a brexit plan b. there are growing signs that parliament will reject the deal she has reached the european union and will try to take control of what happens next. she will provide certainty on the way forward if her plan is rejected. jeremy corbyn says he would call for an election. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries.

i'm courtney donohoe. this is bloomberg. vonnie: u.k. prime minister theresa may and japanese prime minister shinzo abe are scheduled to hold a news conference amid growing signs that the british parliament will brexit plans. we will have live coverage. this is bloomberg. ♪

i'm guym london, johnson. vonnie: i'm vonnie quinn. the markets have suddenly turn. we've got abigail doolittle. have a bit of a turnaround for the major averages. down between .7% and more than 1%.

we see these very small gains of birth day in a row. the longest such winning streak since the middle of september. we have this january effect where investors and traders buy stocks that were eaten down in december. last year more so than typical. buyers again trying to step up. where we have a weakness and pressure earlier in the day closer to the open, the retail space. stores, just absolute carnage. all of these retailers disappointing around the holiday. really the standout loser is .acy's down 18.4% they cut annual sales and profit view and many of the women's categories truly under delivered more than 56% from its all-time peak. really piling on to those

losses and there is a 14% there shortage this year. everybody is surprised with those weak results out macy's. where we have another influence relative to this weakness for retail amazon has been on a tremendous winning streak. these are the last 11 days into today. shares had been up for the bloomberg data of more than 40% -- up more than 40%. those department stores, shares of amazon earlier today down 2%. and where we also have our weakness the transports. the big lag are here american airlines. they had a disappointing fourth-quarter and this comes on weakening fares really weighing on this space overall.

major averages have popped slightly higher. i'm looking to see whether we can get through 2600 today. we are anticipating that we are going to hear from theresa may and shinzo abe. pro-eu toriese and opposition mps have delivered two defeats in a row for theresa may's government. german court is prepared to launch a vote of no-confidence. he's a little -- jeremy corbyn is prepared to launch a vote of no-confidence. he's little coy. >> if the government cannot pass its most important legislation, then there must be a general election at the earliest opportunity. a government that cannot get its business through the house of commons is no government at all. saying he needs to pick his moment and it's unclear when

that moment would be. all of theest says options for theresa may see her confronting the eurosceptic wing of her party. the next few days for me. walk me through the choreography of where we're going. because it's incredibly complex now. >> it is. we have a few days left of debate before the vote on the 15th. it's widely expected she will lose the vote on her brexit deal. under a new amendment that was passed very controversially she now only has three days in which --come back with claim to with plan b. the important thing to know is that none of the options that parliament debates or votes on in the wake of her deal getting rejected have any legal force. what it does say is whether there is a parliamentary majority for some other course

, whether it's a second referendum, whether it's in no deal exit which is highly doubtful. i think the big question is what is theresa may going to come back with and who is going to get her out of this dilemma? onlynk there are really two plausible options. either she does something you with the labour party to get a majority through for her deal for a version of it or she's going to have to probably through this back to the electorate somehow and i don't think she wants to do that for a second referendum. that leaves an election which opens another can of worms. but those are the choices. 50, is extending article it even possible? >> it is certainly possible to extend article 50. the eu would likely only do that in the event of a new election for referendum or something quite substantial.

i don't think they will extend article 50 just because parliament has yet to decide to and the extension of article 50 requires all 27 other member sotes to agree unanimously it is something the u.k. would only ask for in such a circumstance as a second referendum for an election. has been saying for a while but that's a possibility. i don't think there's anything jeremynew here with corbyn saying they might want to extend article 50. what's a little more pronounced from corban is the threat of the no-confidence vote in government. guy: how does he time that? he's trying to play his cards as close to his chest as he possibly can and i can understand why from a technical point of view. come?oes that moment

when does jeremy corbyn pull the trigger on this one? the thing to understand about corban is he actually really doesn't want a second referendum which is what his party is committed to if they can't get an election. and he's forced to say now we are going to go for a second referendum and he doesn't want that because he would actually prefer to leave the eu. he would prefer to have the new election. so i think he will not do it directly after the 15th vote. canill wait to see if you tont on some tory rebels mps join the labour party as they did with the amendment this week to help a no-confidence vote go through. a few months ago i would have said no way are the tories going to vote for new elections. look at what happened in 2017. i think we are really in uncharted territory now. for those mps who want to

prevent no deal and this is a question of riddance constitutional integrity -- britain's constitutional integrity. aboutould think very hard doing that. vonnie: what exactly does parliament want you -- want? is it just to take control? it's unclear how they would go about the process of shaping it even if they vote down theresa may steel. deal.resa may's >> there is a group that wants to leave without a deal at all. it's a small group but they are very united and what they have on their side is really the clock because if nothing else 29 britainmarch leaves with no deal. the other group is sort of a motley crew of some that want to remain, some that would accept

theresa may's deal. some that would want a second referendum. parliament wants to take control. to do what was it is not clear. vonnie: thank you. this is bloomberg. ♪

go until minutes to the end of regular trading in europe. sick a quick look at what is happening. it's a day of consolidation. the dax is absolutely flat right now. some really difficult retail news from the united states. it's a similar picture in europe. some of the big retail names are trading lower as well. three minutes to go now. is bloomberg. -- this is bloomberg. ♪

until theconds to go end of regular trading in europe and not a lot happening. you don't have much market

movement. the u.k. is not doing much either. the dax is absolutely flat right now. the dax is finishing up regular trading. up by a little bit. the pound is down a little bit today. that relationship still working to a certain extent. let's take a little look at where we it right now in terms of the sector breakdown. instructive as to where we sit in europe. function that breaks down what we've got in terms of sector rotation. money is rotating out of retail. technology is trading lower. also parts trading for the downside. there has been upside movement to the parts sector. today we have had disappointing news coming out of ford and

land rover. utilities are trading stronger. banks are actually having a pretty strong day as well. volume that is light. we are having a consolidation day. the market is trading quite softly in terms of the volume story. there are the averages. to be honest volume is not great as we consolidate sideways here in europe. vonnie: improvement in the overall indices from early this morning. the s&p 500 is trading between a couple points down and a couple .oints up right now retail is really dragging on the s&p today. holiday sales. many of the other retailers

suffering as well. department stores are the worst performers as a group in the s&p 500. it's not impacting amazon. the dollar index is a little stronger today but it is still at that 95 .44 mark. yield 2.72% and crude oil is going nowhere today. holding onto those gains from the last few days. it's have a quick look at some of developed markets. we have a mixed picture for commodities. waiting on some of those details of negotiations with china. we are also waiting on theresa may and should they -- shinzo abe to tell us what they have been talking about.

a surprise victory for an opposition candidate in the democratic republic of congo means the country faces a first change in presidents 2001 and its first peaceful leadership transition since 1960. in opposition candidate has never one before. in pauline backs from johannesburg. how big a surprise that the president-elect has won and will he prove victorious? there are clouds hanging over the election. >> most definitely. it was a huge surprise that he won. their bets on the favorite candidate. he did not win. he came in third. the catholic church which is usually influential in congo has

suggested that the opposition candidate was the likely winner and is -- as it turns out it was felix. a lot of analysts believe the results may have been altered by becausetoral commission he is seen as probably a safer candidate and he might be willing to do some kind of power-sharing deal with the outgoing administration. vonnie: what does this new president mean for congo and its growth prospects? outgoing government has been raising taxes and royalties on mining companies last year and the expectation was that it would continue to do so this renegotiately contracts with mining companies in congo. congo is important for the industry for electric vehicles. it is the world's biggest producer of cobalt.

it also produces gold. the companies operating there are glencore, china moly. all kinds of metals and or es. royalties is and not what the mining industry would like so it remains to be seen with the president-elect will continue on the path of the outgoing government or maybe mark a shift in policy. left is slightly doubtful. it's really hard to say at this point. guy: this is a huge country and it's got many problems. poverty is obviously extreme. we have an evil outbreak the country is dealing with right now. how high up the list is sorting out the mining problem that comes to the new government? it will behind on the list because it is hugely important for income. doesn't have other sources of revenue other than mining.

to some extent it will want to appease the mining companies. it has to strike deals with them to continue to export metals. i -- i think a deal might the in the works. it might continue the path of raising taxes and royalties. one good outcome for the mining industry that the likelihood of major opposition protests in the coming days is unlikely. expected before and now it seems the results not really prompted people to go out on the street and protest. vonnie: what does that mean for any opposition to this result? will we see the catholic church -- what would be the process for contesting this result? they still have to be

validated by the constitutional court. it is likely staffed with people who are loyal to the outgoing regime. still we have to wait for that validation. the catholic church would favor any disputes to be solved in a legal way. it has said that it thinks the results were authored and do not the results as announced by the electoral commission. the opposition candidate has said he finds this completely unacceptable and he might try to mobilize supporters to hold protests in the coming days. guy: thank you very much indeed. vonnie: here's courtney donohoe. >> president trump says if you can't reach a deal with congress to build the border wall he will probably declare a national emergency to get it done. the president says white house lawyers have told him he has the

absolute right to do so. to mcallenlying texas to look at the border and meet with border patrol agents. says itand gas industry hasn't felt any real impact from the partial government shutdown. the interior department has accepted and published 22 new drilling permit applications. the department isn't accepting other sorts of filings such as public records request from journalists and activists. the new year didn't change much in the u.s. labor market. there is still plenty of demand for workers. filings for unemployment benefits fell to a four-week low. secretary of state pompeo met with leaders in egypt today as part of the torment to ease arab leaders concerns about future american involvement in the region. pompeo tweeted that it's meeting with the president was

.roductive global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. i'm courtney donohoe. this is bloomberg. through the auction process. let's see where european equity markets have settled. we saw a balance during those five minutes. equities catching a little bit of a bid. 100 upcan see the ftse 36 points at the end of play. the dax was flat as we went into the auction process. the luxury goods sector under pressure. the retail news from around the world not great. don't forget to trade in -- to name -- tune in. i will be joined by jonathan ferro on the radio.

this is bloomberg. ♪

vonnie: from new york, i'm vonnie quinn. guy: in london, i'm guy johnson. this is the european close on bloomberg markets. let's focus on european banks and lots to talk about today. the money laundering case keeps growing. the bad news just keeps coming. joining us now is your finance and investing managing editor. i'm just going to hold that

thought for a moment. i just want to say that shinzo abe in the british prime mr. theresa may have just walked out. they are going to be making opening statements. from what we understand we are probably going to learn something today from theresa may when we get into the q&a. so what we're going to do is come back to that in just a moment and we will get to it and learn where theresa may sits on the brexit story she has to negotiate. bank talk about danske which is a story that continues in a saga like way in the same way that brexit does. today phil browder. very strong connections into the russian economy giving testimony in the danish parliament. what he effectively said was that dansk a lied to the french authorities. >> that's right.

this opens a can of worms yet again. e,e case against dansk ande's new evidence regulators will start investigating again. ehe biggest issue for dansk is the drumbeat of that news is itsng a palpable impact on shares. vonnie: will have to happen? what are the solutions analysts are fielding for danske? >> there are so many different elements to this. one is of course what are we looking at in terms of fines and penalties from various regulators. danske is being probed in multiple jurisdictions. the u.s. has sued danske bank.

you're looking at the cost of funding for debt offerings that moscow won't be able to command -- danske won't be will to command banks to all the risk to you have higher rates that it's going to have to effectively pay to get its bond deals done and then you have the shares. they have lost more than half of their value over the past year. they fell again today given the uncertainty about when it will be able to resume with its bond offering. guy: and deutsche bank, the drumbeat of bad news continues there. at deutsche bank the panama papers, their involvement with the panama papers lead to a very -- the spectacle of the police and the prosecutors storming into their offices.

run isat has in turn opened and exposed deutsche bank to something the ceo has repeatedly said is a closed matter. on now as we are coming up the fact that prosecutors have itcovered 900 clients names level.ed on to the next it was a key piece of evidence prosecutors were looking for in the investigation. there weren't a lot of german nationals on that list of 900 people. what it does do is prosecutors will be working with authorities in various countries to see where these clients were from. vonnie: how long can deutsche thatstave off the idea

they will be making decisions for us? >> deutsche bank also has an activist investor. however the activist has been fairly supported of deutsche bank's management up until now. it will be crucial to see how deutsche bank's management navigates the bank through this crisis. as you know there are many options on the table including a rivalswith regional that's been reported before. is how long deutsche bank will be able to keep the confidence of key investors. increasinglyng difficult for deutsche bank.

guy: how much time have the banks got? recessionuld be in even before the united states. the cycle is clearly beginning to roll over or we can at least see the end of the cycle from where we are now. europe has not made enormous progress in fixing its banks. we have come some way we haven't gone as far as we should have done. how much do we need to see over the next few months in terms of progress? a key year ine determining the fate of a lot of these european banks. in the case of deutsche bank one could argue that this could be the year where an endgame in some way will have to become apparent. we are also looking at volatility has returned to the markets and there was a glimpse worldwide have fared with some of the volatility.

you have seen trading losses for many of these banks. what we are moving towards is a world where revenues will grind inexorably lower. there are external shocks from market volatility that will hit -- that will probably spur losses. the short answer to your question is this will be a make or break year for many of these banks in terms of what their next strategy is going to be to spur growth. big take year coming up -- year coming up for european banks. thank you very much. vonnie: u.s. chamber of commerce president and ceo tom donahue joins balance of power as the business group calls for an immediate end to the partial government shutdown. this is bloomberg. ♪

guy: shinzo abe, the japanese prime minister speaking at a joint press conference with theresa may, the british prime minister. theresa may has already spoken. we are now hearing the statement from the japanese prime minister saying the whole world wants britain to avoid a no deal. he has been briefed by the japanese carmakers to make clear to theresa may the impact that would come if britain were to crash out of the eu with no deal. we are waiting for the q&a. we think we are going to be getting maybe a little bit more clarity from theresa may during that. we will bring you those moments in just a couple of seconds. we probably need to be talking about what's happening in the airline sector. vonnie: time for stock of the hour. shares of american airlines hitting a little turbulence. and it's not the only airline

out there in trouble today. >> cutting earnings guidance for the full year are now going to -- $4.4. $44 revenue is the key pricing power and is only going to grow about 1.5% where as they previously thought as much as 3.5%. of course this is an issue because of capacity. a lot of capacity, a lot of seats are coming into the marketplace not necessarily being met with the demand. this as you mentioned not just an issue for americans. it's a broad trend across all the airlines. news from delta last week, then they also cut their revenue forecast on weak fares. this is at into a lot of concerns about the broader airline environment also about

global growth. american is also the hardest hit amongst the airlines so far this year in terms of the share prices. down really aggressively. so why is it underperforming? >> i have a chart i can show you. it's a good question. bloomberg intelligence rightly points out that american is the most highly leveraged out of all the airlines. they have really refresh their fleet and spent a lot of money. i also want to point out as we are all watching this partial government shutdown and analyst pointed out that an american could potentially be the most impacted by that because they have the large majority of seats at reagan national airport. government contractors are now

coming into d.c. vonnie: tomorrow the first payday that 800,000 people will miss. down 6.75%. united continental down. lows and the s&p 500 is actually up a point now. we are far away from the 2600 mark. 43 points and the nasdaq is unchanged. the 10 year u.s. treasury 2.71%. let's have a look at some currency because we are getting some action there today. the mexican peso is all the way at 1916. plenty of strength for the mexican peso. presidentar from the somewhere around 2:00 or at least we will see him arriving in texas. sterling, 127.66.

all of this helping the dollar index strengthen today. -- 95.40 95 point 40 today. the dollar index has been one to watch in terms of setting the overall tone in terms of the markets. we are watching what is happening down in westminster. shinzo abe has just completed his opening statement. we are now into the q&a. we will come back to that very shortly. this is bloomberg. ♪

♪ 's from bloomberg world

headquarters, i am shery ahn. >> i am kevin cirilli in washington dc. welcome to bloomberg "balance of power." abeheresa may and shinzo a conference. you can watch the full event on the bloomberg at live go. here in the united states, we are entering day 20 of the partial government shutdown for you president trump judge yesterday walking out with a meeting of the congressional leaders, it seems there is no end in sight. kevin: absolutely no end in sight for you i was struck just to see how really republicans are starting to voice more publicly in the senate about their dissatisfaction with president trump, particularly